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1
Banco Itaú Holding Financeira S.A.
September, 2003
2
Banco Itaú Holding Financeira S.A.
• Largest Market Capitalization of the Brazilian Banking System: R$ 25.6 Billion (08/21/03);
• Financial Holding Company status, granted by FED;
• Member of the Dow Jones Sustainability World Index since 1999;
• Largest participation in BOVESPA’s Corporate Governance Index (IGC): 23.7% (08/18/03);
• Most Valuable Brand in Brazil: US$ 1.1 billion (Interbrand – June 2003).
3
Results
Stock Market
Management in different scenarios
Sensitivity Analysis - Retail
Agenda
Earnings per Share
International Operations
Itaú BBA
4
Results
Agenda
Stock Market
Management in different scenarios
Sensitivity Analysis - Retail
Earnings per Share
International Operations
Itaú BBA
5
2.40%2.80%
1st Sem 2002 1st Sem 2003
26.90%
29.60%
1st Sem 2002 1st Sem 2003
Annualized ROEAnnualized ROE
Efficiency RatioEfficiency Ratio
Credit Operations Credit Operations NonperformingNonperforming
5.90%4.65%
1st Sem 2002 1st Sem 2003
55.20%
42.90%
1st Sem 2002 1st Sem 2003
Highlights – 1st Semester of 2003 and 2002
2.7 p.p.
0.4 p.p. -12.3 p.p.
-1.2 p.p.
Annualized ROAAnnualized ROA
6
R$ Million
Consolidated Balance Sheet
Liabilities
Total Liabilities
Mutual Funds
Deposits
Open Market and others
Accept./Issue - Securities
Foreign Exchange
Borrowings/On-Lending
Tech. Prov Ins/Cap/Pens.
Other Liabilities
Minority Interest
Stockholders` Equity
06/30/03with BBA
and FIAT
106,799
67,142
34,826
14,560
5,085
5,356
28,806
5,388
1,058
948
10,772
94,265
without BBA
and FIAT
62,391
30,929
14,015
3,623
5,153
23,071
5,388
199
865
10,772
06/30/02
86,247
56,243
28,754
16,478
3,852
3,370
20,625
3,459
673
748
8,288
Assets
Total Assets
Guarantees
Cash + Liquidity
Securities
(Additional Allowance)
Interbank Relations
Net Credit Operations
(Additional Allowance)
Foreign Exchange
Others
Permanent Assets
06/30/03with BBA
and FIAT
106,799
6,232
16,315
26,052
(545)
9,917
36,120
(848)
7,270
9,238
3,280
without BBA
and FIAT
94,265
4,778
16,385
21,874
(545)
9,741
26,501
(792)
6,737
8,706
5,658
06/30/02
86,247
4,681
15,517
20,414
(597)
7,138
27,962
(715)
4,722
8,309
3,497
7
Credit Operations
Credit Operations Credit Operations + Guarantees
R$ Million
16,890
23,674
29,61519,596
27,253
38,419 38,35434,282
44,58645,414
0
10,000
20,000
30,000
40,000
50,000
1999 2000 2001 2002 2003 (*)
28,30233,080
06/30/2003Itaú Holding without BBA and FIAT
Credit OperationsCredit Operations + Guarantees
31,50637,020
12/31/2002
(*) On June 30, 2003
CAGR = 26.5%
8
5.90 5.60
4.17 4.164.65
12.67 12.90
8.94
1.73 1.66 1.461.99 2.35
8.46
10.66
jun-02 sep-02 dec-02 mar-03 jun-03
Credit Operations
Global
IndividualsCompanies
Nonperforming Loans (over 60 days) Ratio (%)Nonperforming Loans (over 60 days) Ratio (%)
Coverage Ratio (*)Coverage Ratio (*)
164% 172%198% 189%
173%
jun-02 sep-02 dec-02 mar-03 jun-03
Provision for Loan LossesProvision for Loan Losses R$ Million
Total Provision
(A)
Portfolio overdue over 14 days (B)
(A) – (B)
jun/01 (223)
dec/01 (118)
jun/02 (231)
dec/02 607
jun/03
2.413
2.686
3.142
2.565
2.834
2,190
2,568
2,911
3.172
3.082 248
(*) Provision for Loan Losses / Total Nonperforming Loans over 60 days
9
Provision for Loan Losses
R$ Million
Minimum Provision
Additional Provision
Total Provision
1,406 1,5101,692
1,853 1,9532,196
2,5152,332 2,285 2,234
630680
680715
715
715
747841 843 848
3,172 3,128 3,0822,911
3,262
2,6682,568
2,3722,190
2,036
Mar.01 Jun.01 Sep.01 Dec.01 Mar.02 Jun.02 Sep.02 Dec.02 Mar.03 Jun.03
10
Funds Raised and Managed
R$ Million
23,22527,875 28,331 28,754
34,826
31,994
41,664
55,796 56,243
67,142
55,219
69,539
84,127 84,997
101,968
0
20,000
40,000
60,000
80,000
100,000
120,000
1999 2000 2001 2002 2003(*)
(*) On June 30, 2003.
Assets under Management
Total Resources
Total Deposits CAGR = 19.2%
11
Statement of IncomeR$ Million
Total Assets 106,799 94,265 86,247
Financial Margin
Provision for Loan and Lease Losses
Banking Service Fees
Personnel + Other Administrative Expenses
Equity share from subsidiaries and affiliates
Extraordinary Result
Net Income
5,472
(932)
2,449
(3,554)
(62)
(548)
1,490
1st Semester
4,615
(785)
2,381
(3,350)
128
(545)
1,490
3,885
(943)
2,010
(3,366)
200
(23)
1,048
2003
With BBA and FIAT
2002Without BBA and FIAT
23.8% 9.3%
42.2% 42.2%
12
1st Semester 2002With BBAand FIAT
590
150
468
85
100
266
470
56
16
248
2,449
Without BBAand FIAT
580
150
468
85
100
266
470
42
2
218
2,381
Mutual Funds Management Fees
Collection
Current Account Services
Tax Collection
Interbank Fees
Credit Operations
Credit Cards
Income from Guarantees Provided
Income from Administration of Consortium
Other
Total
501
142
414
78
97
219
332
31
-
195
2,011
2003
Banking Service FeesR$ Million
18.4%21.8%
Banco Fiat contributed with
R$ 15 million
13
R$ Million
Insurance, Capitalization and Pension Plans
157
13
2 246
(234) (28) 27
170
7 177
(60) (3)
Financial Margin
Other Revenues / Operating Expenses
Banking Service FeesPartial Results of Insurance, Capitalization and Pension PlansAdministrative ExpensesTax ExpensesOther Operating Income / Operating ExpensesOperating Income
Non-Operating IncomeIncome before Income Tax
Income Tax / Social ContributionProfit Sharing
309
56 20
322 (203)
(45) (38) 365
7 372
(127) (3)
242Net Income 114
112%
1st Semester 20022003
14Source: Published Financial Statements
(*) Banking Revenues: Financial Margin + Banking Services Fees + Income from Insurance Premiums, Pension Plans and Capitalization + Equity in Income of Affiliates
Quantity of Shares Adjusted by splits and subscriptions and Excluding Shares in Treasury
440
210
243
0
50
100
150
200
250
300
350
400
450
500
550
600
1995 1996 1997 1998 1999 2000 2001 2002
Itaú
Bradesco
Unibanco
Comparative: Banking Revenues/Share(*) Base: 1995 = 100Base: 1995 = 100
270
152
163
15
Administrative Expenses
R$ Million
1,234
2,088
1,165
1,954
1,161
1,850
1st Semester 2002
Personnel Expenses
Other Administrative Expenses
2003S/ BBAe FIAT
2003C/ BBAe FIAT
3,322 3,119 3,011Sub-Total
232 231 355Restructuring
3,554 3,350 3,366Total
16
R$ Million
1st Semester
Personnel Expenses
Administrative Expenses
Sub-Total
Restructuring
Total (Without BBA and FIAT)
Salaries.......7%
Dollar.........45%IPCA*.........17%
Indices
Salaries.......7%
Total (With BBA and FIAT)
1,165
1,954
2003
3,119
231
3,350
3,554
204• BBA + FIAT
(58)
(344)
Variation
(402)
(149)
(551)
(347)
-
1,223
2,298
2002 Adjusted
3,521
380
3,901
3,901
-
Adjusted Administrative Expenses
(*) IPCA = Consumer Prices Index
17
Results
Itaú BBA
Stock Market
Management in different scenarios
Sensitivity Analysis - Retail
Agenda
Earnings per Share
International Operations
Stock Market
Management in different scenarios
Sensitivity Analysis - Retail
Earnings per Share
International Operations
Itaú BBA
18
187 267 345 476 559 8001,232 1,071
2,038535
-548-23-82
225
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1995 1996 1997 1998 1999 2000 2001 2002 2003*
Extraordinary Result
Recurring Result 1st Sem.
Evolution of Net Income - Semesters
(*) On June 30, 2003
R$ Million
CAGR Recurring = 37.5%
1,490
19
347 610939 1,128
1,5181,918
2,353
3,080
-218 -248
351
-703-77
36
-18
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1995 1996 1997 1998 1999 2000 2001 2002 2003*
Extraordinary Result
Recurring Result
R$ Million
(*) On June 30, 2003
CAGR Recurring = 36.6%
2,377
Evolution of Net Income - Annual
20
1.57 2.23 2.89 4.04 4.74 6.9511.04 9.63
17.824.54
-4.79-0.7 -0.21
2.02
-10
-5
0
5
10
15
20
25
30
1995 1996 1997 1998 1999 2000 2001 2002 2003*
Extraordinary EPS
Recurring EPS
Evolution of EPS - Semesters
(*) On June 30, 2003
13.03
CAGR Recurring = 38.3%
Decr. Number of Shares (%) = -0.6%
R$
21
2.91 5.097.86 9.57
12.8716.66
21.08
27.69
-1.83
2.98
-2.1-6.32
-0.67
0.32
-0.15
-10
-5
0
5
10
15
20
25
30
1995 1996 1997 1998 1999 2000 2001 2002 2003*
Extraordinary EPS
Recurring EPS
(*) On June 30, 2003
21.37
CAGR Recurring = 38.0%Decr. Number of Shares (%) = -1.0%
R$
Evolution of EPS - Annual
22
0
100
200
300
400
500
600
700
800
900
1000
1995 1996 1997 1998 1999 2000 2001 2002 2003
Itaú (*)
Bradesco
Unibanco
Source: Published Financial Statements
Market Comparison – EPSBase: 1995 = 100Base: 1995 = 100
556
258
324
743
293
449
23
906
268
439
0
100
200
300
400
500
600
700
800
900
1000
1995 1996 1997 1998 1999 2000 2001 2002 2003
Itaú (*)
Bradesco
Unibanco
Source: Published Financial Statements
Just for comparison purposes the half-yearly net incomes were multiplied by 2 (EPS Base: 1995 = 100)
Market Comparison – EPSBase: 1995 = 100Base: 1995 = 100
556
258
324
743
293
449
24
906
268
439
0
100
200
300
400
500
600
700
800
900
1000
1995 1996 1997 1998 1999 2000 2001 2002 2003
Itaú (*)
Bradesco
Unibanco
Source: Published Financial Statements
Just for comparison purposes the half-yearly net incomes were multiplied by 2 (EPS Base: 1995 = 100)
Market Comparison – EPSBase: 1995 = 100Base: 1995 = 100
556
258
324
743
293
449Results consistent with
the Shareholder
Value
25
Results
Agenda
Stock Market
Management in different scenarios
Sensitivity Analysis - Retail
Earnings per Share
International Operations
Itaú BBA
26
10,896
18,915
23,341
7,056
18,141
20,05618,550
21,811
19,122
25,575
22,148
9,269
17,119 16,969
3,185
6,0367,185
5,6354,861
6,382
15,120
18,06817,490
20,345
15,451
6,901
15,847
19,808
6,901 6,963
2,439
7,5377,460
0
5,000
10,000
15,000
20,000
25,000
Dec-98
Mar-99
Jun-99
Sep-99
Dec-99
Mar-00
Jun-00
Sep-00
Dec-00
Mar-01
Jun-01
Sep-01
Dec-01
Mar-02
Jun-02
Sep-02
Dec-02
Mar-03
Jun-03
Aug-03
R$ Million
Source: Economática. Period : Dec/98 until Aug. 21 2003
Itaú
Bradesco
Unibanco
The largest banks in Brazil
BradescoItaú HoldingUnibanco
Stockholders’ Equity Jun/2003
12,62910,772
7,601
Consistently the largest Market Capitalization in Brazilian banking sector
27
32,520,887
30,415,020
16,617,34916,617,349
21,071,420
21,986,065
11,449,467
8,428,955
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
2001 2002 2003(**)
Total Bovespa NYSE
R$
Daily Average Traded Volume - LiquidityBovespa + NYSE(*)Bovespa + NYSE(*)
(*) – Common, Preferred Shares and ADRs
(**) – Daily Average until August 21, 2003
CAGR = 47.9%
CAGR = 14.9%
28
32,520,887
30,415,020
16,617,34916,617,349
21,071,420
21,986,065
11,449,467
8,428,955
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
2001 2002 2003(**)
Total Bovespa NYSE
R$CAGR = 47.9%
CAGR = 14.9%
Equivalent to US$ 11 million
Aug/03 :Over 10 million
ADRs Issued
Daily Average Traded Volume - LiquidityBovespa + NYSE(*)Bovespa + NYSE(*)
(*) – Common, Preferred Shares and ADRs
(**) – Daily Average until August 21, 2003
29
0
200
400
600
800
1.000
1.200
93 94 95 96 97 98 99 00 01 02 03
Itaú (1)Itaú (2)Bovespa
US$
100
748
321
1,094Itaú(1) Itaú(2) Ibov.
10 years 25.19% 20.80% 11.57%
5 years 20.76% 16.14% -2.32%
2003 74.20% 71.17% 57.35%
Annual Average Appreciation in US$
Real Plan
Russian Crisis
Real Devaluation
Mexican Crisis
Asian Crisis
Argentine Crisis
Attack to WTC
(1) With reinvestment of dividends(2) Without reinvestment of dividends
Preferred Shares AppreciationEvolution of US$ 100 Invested from Dec. 1992 to August 21, 2003Evolution of US$ 100 Invested from Dec. 1992 to August 21, 2003
30
Results
Agenda
Stock Market
Management in different scenarios
Sensitivity Analysis - Retail
Earnings per Share
International Operations
Itaú BBA
31
Target Planned Growth Shareholder Value
1990 20031994
Anticipating Scenarios Before and After Real Plan
Changes in the Approach
32
10,772
2,229
9,036
7,578
6,6425,907
4,198
3,3372,857
880
181
2,377
2,389
1,8411,869
721592
3433923820
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03(*)
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,750
3,000
3,250
3,500
3,750
4,000
Stockholders' Equity
Net Income
R$ Million
CAGR)(90-03) = 13.4%
1st Semester of 2003Net Income:
R$ 1,490 Million
(*) June 30, 2003
CAGR(90-02) = 23.9%
Sustained Results GrowthEvolution of Stockhoders’ Equity and Net Evolution of Stockhoders’ Equity and Net IncomeIncome
33
2,8573,337
4,198
5,9076,642
7,578
9,036
2,229
10,772
880
382 392 343
592721
1,869 1,841
2,389
2,377
1810
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03(*)
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,750
3,000
3,250
3,500
3,750
4,000
Stockholders' Equity
Net Income
Real Plan
Mexican Crisis
Asian Crisis
Russian Crisis
Real Devaluation Argentine
Crisis
Collor Plan
R$ Million
CAGR)(90-03) = 13.4%
Sustained Results GrowthEvolution of Stockhoders’ Equity and Net Evolution of Stockhoders’ Equity and Net IncomeIncome
1st Semester of 2003Net Income:
R$ 1,490 Million
(*) June 30, 2003
CAGR(90-02) = 23.9%
Jan/90 to Jun/03Dividends:
R$ 4.6 BillionCapital Increase (1):
R$ 0.1 Billion
Adaptability to Scenarios
34
2,218 2,233 2,971 3,437 3,247
5,8387,184
18,550
21,81120,056
25,575
19,122
7,056
0
5,000
10,000
15,000
20,000
25,000
30,000
91 92 93 94 95 96 97 98 99 00 01 02 03(*)
R$ Million
(*) – August 21, 2003
Market CapitalizationBanco Itaú Holding Financeira S.A.Banco Itaú Holding Financeira S.A.
CAGR = 23.7%
35
1990 20031994
Operational To perform well! To perform efficiently!
Anticipating Scenarios Before and After Real Plan
Target Planned Growth Shareholder Value
Changes in the Approach
36
159.1
209.3190.7
336.5
395.6
452.7
257.7
0
100
200
300
400
500
1996 1997 1998 1999 2000 2001 2002
CAGR = 19.0%
R$ Million
(*) Includes: Electronic Bank, Computers and Peripherals and Telecommunications.
Investments in Infrastructure (*)...
1st Sem/2003 = R$ 151.8 million
Total in the period:R$ 2.2 billion
Accounting Value R$ 469 million
(06/30/03)
37
1 154 340923
13,777
8,876
27
6,558
11,714
2,976
18,533
795 866 9131,071
1,8532,017
1,826
2,597
1,905
1,479
582
3,175
1,304
2,995
400
1,100
1,800
2,500
3,200
75 77 79 81 83 85 87 89 91 93 95 97 99 01 03(*)
0
5,000
10,000
15,000
20,000
ATMs
Quantity
Branches + CSBs(**)
(*) June 30, 2003 (**) – Customer Site Branch
CAGRBranches + CSBs = 6.4%
SustainabilityDistribution Network EvolutionDistribution Network Evolution
Obs.: 308 Points of Sale in 1972
38
5,051 5,2475,524 5,587
6,060
8,411
13,892
10,764
13,462
4,2894,800
4,000
6,000
8,000
10,000
12,000
14,000
85 87 89 91 93 95 97 99 01 03(*)
Checking Accounts(**)
Checking AccountsThousand
(*) June 30, 2003
CAGR = 6.0%
(**) – 1990, 1991 and 1992 : excluded the checking accounts in NCz$ and DER / VOBC
39
41,630
47,524
42,262
31,368
87,436
54,300
41,911
32,750
25,000
66,922
37,119
49,433
60,865
77,692
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
75 77 79 81 83 85 87 89 91 93 95 97 99 01 03(*)
Employees
Employees
(*) June 30, 2003
CAGR = 1.9%
40
154
344
111
79514142
222
1,998
1,427
1,121
813
477284141
2,598
0
40
80
120
160
200
240
280
320
360
1995 1996 1997 1998 1999 2000 2001 2002
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
Transactions (milllion)
Customers (million)
1st Semester 2003Transactions: 204 Million
Customers: 2.9 Million
… Creating Efficiency to our Customers Internet BankingInternet Banking
41
Efficiency Ratio(¹)
Great efforts to optimize the operational expenses and increase the efficiency
79%
43%49%
55%58%58%58%64%
58%57%
70%72%70%
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
(*)
(*) 1st Semester 2003
42
1990 20031994
Market Growth Focus
Anticipating Scenarios Before and After Real Plan
Target Planned Growth Shareholder Value
Operational To perform well! To perform efficiently!
Changes in the Approach
43
Market Segmentation Structure
Public Sector
Very Small CompaniesAnnual Sales < R$ 500 Thousand
PrivateInvestments > R$ 1 Million
Personnalité ItaúIncome > R$ 5,000
IndividualsIncome > R$ 2,000
“Individual”
Specialized Structures With Account Managers Without Account Managers
IndividualsCompanies
Small CompaniesR$ 500Tthousand < Annual Sales < R$ 10 Million
Medium CompaniesR$ 10 Million < Annual Sales < R$ 100 Million
Banco Itaú Holding Financeira
Banco Itaú-BBA Banco Itaú
Large Corporations
• Premium• Investor• Undertaker
Card Holder
44
Loan Operations (*)
By Currency
Foreign Currency
Local Currency
Total
13,412
31,174
44,586
(*) Includes Guarantees
15,187
31,203
46,390
10,962
23,877
34,839
-11.7%
-0.1%
-3.9%
22.3%
30.6%
28.0%
R$ Million
By Segment
Large Companies
Very Small, Small and Medium
Companies
Individuals
Credit Card
Real Estate Indiv.
Comp.
- TOTAL
06/30/03
25,830
4,077
9,672
2,809
2,096
102
44,586
03/31/03
27,492
4,262
9,751
2,618
2,154
113
46,390
06/30/02
19,172
3,400
6,924
2,758
2,411
175
34,839
Variation %Jun/03 – Mar/03
-6.0%
-4.3%
-0.8%
7.3%
-2.7%
-9.7%
-3.9%
Variation %Jun/03 – Jun/02
34.7%
19.9%
39.7%
1.9%
-13.0%
-41.4%
28.0%
R$ Million
06/30/03 03/31/03 06/30/02Variation %
Jun/03 – Mar/03Variation %
Jun/03 – Jun/02
45
1990 20031994
Personnel Generic Specialization
Anticipating Scenarios Before and After Real Plan
Target Planned Growth Shareholder Value
Operational To perform well! To perform efficiently!
Market Growth Focus
Changes in the Approach
46
12.6%15.2%
17.0%18.8%
23.8%26.2%
30.9% 33.0%
28.1%
1.3% 1.6%
2.9%
8.1%
0.9% 0.9%
8.6%
4.7%
2.8%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
1994 1995 1996 1997 1998 1999 2000 2001 2002
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Graduated
Post-Graduated
Evolution of Employees Scholar Level
41.1%
‘
47
1990 20031994
Remuneration Fixed Structure Performance Related
Anticipating Scenarios Before and After Real Plan
Target Planned Growth Shareholder Value
Operational To perform well! To perform efficiently!
Market Growth Focus
Personnel Generic Specialization
Changes in the Approach
48
Remuneration – Variable and Fixed
81.3%
18.7%18.7%Variable
Fixed
49
1990 20031994
Risks Avoid Manage
Anticipating Scenarios Before and After Real Plan
Target Planned Growth Shareholder Value
Operational To perform well! To perform efficiently!
Market Growth Focus
Personnel Generic Specialization
Remuneration Fixed Structure Performance Related
Changes in the Approach
50
Interest
Currency
Sovereign Risk
Before 1994
Government Controlled
After 1994
Free Market
Market Risk
51
Different SegmentsDifferent
Risks
Before 1994
Same Prices
After 1994
Different Prices
Credit Risk
52
1990 20031994
Corp. Govern. Formal Active
Anticipating Scenarios Before and After Real Plan
Target Planned Growth Shareholder Value
Operational To perform well! To perform efficiently!
Market Growth Focus
Personnel Generic Specialization
Remuneration Fixed Structure Performance Related
Risks Avoid Manage
Changes in the Approach
53(*) APIMEC – Brazilian Association of Analysts and Investment Professionals of the Capital Markets.
Focus on Corporate Governance
Apr-00 – Creation of the IR website
May-01 – APIMEC* Meeting – 10 hours
Jun-01 – Adherence to Bovespa´s Level 1
Jun-02 – Trading and Disclosure Committees
2002 – 11 APIMEC Meetings (Pioneership in Brazil)
Transparency
Apr-00 – Independent Fiscal Council
Apr-01 – Independent Members in the Board
of Directors
Apr-02 - Tag Along and Reinforcement of the
Independence of the Board
Jul-02 – Trading and Disclosure Committees
Respect to the Minority Shareholders
Member of the Dow Jones Sustainability Index since 1999
Feb. 2002 – Listing of ADR Level II at NYSE + Financial Holding Company status by FED
Effective creation of Value to the Shareholders
54
1990 20031994
Businesses Banking Financial Services
Anticipating Scenarios Before and After Real Plan
Target Planned Growth Shareholder Value
Operational To perform well! To perform efficiently!
Market Growth Focus
Personnel Generic Specialization
Remuneration Fixed Structure Performance Related
Risks Avoid Manage
Corp. Govern. Formal Active
Changes in the Approach
55
SustainabilityIncome Diversification Income Diversification (1)(1)
Year Base: 2002
(1) Income: Financial Margin (Expenses with Provision for Loan Losses not Included) + Banking Services Fees + Income from Insurance, Cap. and Pension Plans and Equity income from unconsolidated investments.
(2) Credit Cards not included. (3) Own Working Capital included
Individuals – 73%
Tax Collection – 3%Treasury(3) – 13%
Ins./Pension Plans/Cap.– 6%Current Account Services – 6%
Funds – 6%
Credit Cards – 10%
Financial Intermediation (2)
- 53% Other – 6% Services
Credit Cards – 10%
Financial Intermediation (2)
- 50%
Companies – 27%
56
CAGR = 25.9%
Evolution of Credit Cards
1,000 1,104
1,829 1,799
2,279
3,321
4,590
5,579 5,616
0
1,000
2,000
3,000
4,000
5,000
6,000
1995 1996 1997 1998 1999 2000 2001 2002 2003*
In Million
(*) On June 30, 2003.
57
Credit CardsMarket Share by Sales (%)Market Share by Sales (%)
Itaucard
Credicard
Bradesco
Banco do Brasil
Unibanco
1997
9.7%
n.d.
10.2%
8.8%
9.7%
1998
9.4%
n.d.
9.5%
10.1%
9.2%
1999
10.3%
27.0%
11.1%
10.5%
8.3%
2000
11.4%
24.8%
11.5%
11.5%
8.1%
2001
12.2%
23.4%
11.5%
12.1%
8.7%
2002
12.7%
20.8%
11.7%
13.1%
8.6%
2003*
12.8%
18.3%
11.9%
13.8%
7.9%
Itaú’s Share in Credicard: 33%
(*) On June 30, 2003.
58
1990 20031994
Target Planned Growth Shareholder Value
Operational To perform well! To perform efficiently!
Market Growth Focus
Personnel Generic Specialization
Remuneration Fixed Structure Performance Related
Risks Avoid Manage
Corp. Govern. Formal Active
Businesses Banking Financial Services
Changes in the Approach
Intangibles Not Managed Managed
Anticipating Scenarios Before and After Real Plan
59
Atualization of the Brand ItaúRevitalizationRevitalization
Previous1992
Current2003
60
ItaúBradesco
Citibank
BankBoston
Real ABN Amro
Unibanco
Banco do Brasil
HSBC
Santander
JP Morgan
Institution 0 2 4 6 8 10 12 14
11.14
10.92
10.40
8.72
6.77
6.50
5.69
3.97
3.71
Average = 5.26
The Most Admired* Banking SectorBanking Sector
(*) Source: Carta Capital Magazine / Interscience
12
5
4
3
6
8
9
12
10
2001
12
3
4
5
6
7
8
9
10
2002
Ranking in 2002
13.6221
4
3
5
8
7
9
12
n.d.
2000
21
3
4
6
5
7
10
n.d.
n.d.
1998
12
4
3
5
8
7
14
13
n.d.
1999
61Source: Datafolha Survey
Most Admired
Bigger Growth
Wish to havean Account
1999 2000 2001
1110
1113
121414
13
1614
16 16
2002
Survey – Data FolhaItaú´s Rankings (%)Itaú´s Rankings (%)
62
Customers (%)Population (%)
Sample researched: Sep/02 = 2,720
Sample: Customers of all banks = 1,041
Most Modern Bank (Top of Mind)
Seleções Magazine
2721Itaú
2020Banco do Brasil
1314Bradesco
79Caixa Econômica Federal
43Unibanco
42HSBC/Bamerindus
32ABN/Real
1117Not known / None
63
The most Valuable Brand in BrazilDinheiro Magazine – 06/04/2003Dinheiro Magazine – 06/04/2003
Company
BradescoBanco do BrasilSkolBrahmaPetrobrasUnibancoEmbraerAntarcticaRealSadiaPerdigão
Value in 2001
697308
---
303196
--
128-
Value in 2003
809427421294286208193184133106100
Itaú 970 1,093
US$ MillionUS$ MillionSurvey conducted by the British company Interbrand
64
Best Brazilian Bank– Euromoney (6th year in a row)
Main Recognitions
Best Brazilian Bank – The Banker (3rd year in a row)
Best Bank in Brazil – Global Finance (2nd year in a row)
Member - Dow Jones Sustainability World Index 2003 (4th year in a row)
1st Brand among Latin American Banks and 3rd Brand – Brandchannel
Best Publicly Listed Company – APIMEC Nationwide (1999 and 2001)
Hors-Concours in Transparency – Atlantic Rating (5th year in a row)
Best Investor Relations Website in Latin America – Investor Relations Magazine
Best Investor Relations Officer – APIMEC Nationwide (1999, 2001 and 2002)
65
Conservative Accounting Practices
Total (*) R$ 2.8 billion
• Additional Provision for Loan Losses R$ 848 million
•Financial Instruments: Market x Recorded Value (Net of Additional Securities Provision) R$ 894 million
• SecuritiesR$ 531 millionMarket to Market
Additional Provision R$ 545 million
Unrealized Amounts June 30, 2003
(*) Explanatory Note 16 (R$ 1,864 million) + Additional Provision for Loan Losses
66
BFB (1995) 281Banerj (1997) 25Bemge (1998) 297Banco del Buen Ayre (1998) 123Banestado (2000) 1,089BEG (2001) 364Lloyds Asset Management (2001) 160BBA(2002) 1,343BBA-Icatu (2002) 51Fiat (2002) 462Total 4,195
Goodwill on Acquisitions
R$ MillionCompletely Amortized in the
Consolidated
67
181 203 235439 455
834
1,342
3,760
1,9571,604
3,751
15.1%
12.3%
15.4%
19.4%18.9%
11.1%
31.6%29.6%
21.4%
18,5%
25.0%
18.8%
11.1%
30.4%
27.7%26.3%
0
1,000
2,000
3,000
4,000
75 77 79 81 83 85 87 89 91 93 95 97 99 01 03(*)
0%
5%
10%
15%
20%
25%
30%
35%
Patrimônio Líquido
ROE
US$ Million %
Average ROE
23.3%
Average ROE
14.4%
Average ROE
18.7%
(*) ROE of the 1st Semester 2003 - AnnualizedObs.: SE of US$ 49 million in 1972
CAGR SE = 11.7%
Average ROE (98-J03) 28%
Working Capital: R$ 7,492 million
(70% of SE)
Evolution of Stockholders’ Equity (SE) and ROE
68
1990 20031994
Anticipating Scenarios Before and After Real Plan
Target Planned Growth Shareholder Value
Operational To perform well! To perform efficiently!
Market Growth Focus
Personnel Generic Specialization
Remuneration Fixed Structure Performance Related
Risks Avoid Manage
Corp. Govern. Formal Active
Businesses Banking Financial Services
Changes in the Approach
Intangibles Not Managed Managed
And what about the
future results?
69
Results
Itaú BBA
Stock Market
Management in different scenarios
Sensitivity Analysis - Retail
Agenda
Earnings per Share
International Operations
Stock Market
Management in different scenarios
Sensitivity Analysis - Retail
Earnings per Share
International Operations
Itaú BBA
70
Variables
Inflation
Interest Rate (SELIC)
Compulsory over Current Deposits
Compulsory over Saving Dep. (TR** + 6% p.a.)
Reduction of Spreads
Growth in Volumes
Controlled Expenses
Scenario (*)
9.2% p.a.
26.2% p.a.
45.0%
20.0%
Current
5.0% p.a.
12.0% p.a.
25.0%
20.0%
(*) Future expectations derived from this sensitivity analysis must consider the risks and uncertainties that involve any activities and are away from the control of the companies of the conglomerate (politic and economic changes, volatility in interest rates and exchange, technology changes, inflation, financial disintermediation, competitive pressures over the products and prices and changes in the applicable regulations).
Sensitivity Analysis – Retail (*)
(**) Interest Reference Rate
71
• Retail Funds
• Branches
• Personnalité
• Small and Middle Companies
• Credit Cards
• Vehicles Financing
• Insurance, Pension Plans and
Capitalization
Sensitivity Analysis – Retail
72
R$ Million
Resources 100 100 100 130 91 70
Current Situation Scenario (*)
Average Balance
Financial Margin
Spread Average Balance
Financial Margin
Spread
Loans - Individuals 100 100 100 154 96 58
Loans - Businesses 100 100 100 149 98 62
Real Estate Credit 100 100 100 152 130 85
Banking Service Fees 100 123
Total Revenues 100 101
Insurance Products 100 166
Provisions 100 94
Expenses 100 120
Net Income before tax 100 87
Return on Capital maintained over
20%
(*) Future expectations derived from this sensitivity analysis must consider the risks and uncertainties that involve any activities and are away from the control of the companies of the conglomerate (politic and economic changes, volatility in interest rates and exchange, technology changes, inflation, financial disintermediation, competitive pressures over the products and prices and changes in the applicable regulations).
Sensitivity Analysis – Retail (*)
73
Results
Agenda
Stock Market
Management in different scenarios
Sensitivity Analysis - Retail
Earnings per Share
International Operations
Itaú BBA
74
5
2
553
22
6
-
25
1
3
300
-
4
12
50
3
2
620
34*
11
-
43
Vice-Presidents
Management levelsto Client
Nº of Employees
Executive Share-holders
Regional Directors
Commercial Superintendents
Officers
(73% of the total)
CorporateBank
Itaú BBA – Structuring the Bank
(*) 12 executiv(*) 12 executives invited to become shareholderses invited to become shareholders
75
Name / Reputation
Solid Capital Base
Ability to Attract and Retain the Best Talents
Being independent enables differentiated HR policies to
generate motivation
Streamlined and informal structure makes for versatility and
responsiveness
Broad range of products
Focus on creating value for shareholders
Summary of Structure and Market Position
76
Challenge overcome
Minimal loss of staff
Readily accepted by clients
Principal Challenge: Integration
Lacks the inertia of retail results
Builds its results anew each quarter
Ability to adapt to circumstances
Competitive in all market segments
Wholesale Bank
Challenges and Opportunities
77
Improvement in credit quality Lower losses and provisions
Higher volumes
Increase in Capital Markets operations
Compensating Factors
Falling spreads
Lower volatility reduces Treasury gains
Falling interest rates
Adverse Factors
Challenges and Opportunities
78
Maintain the high return on equity
Responsibilities
To fully exploit the potential for cross-selling
To multiply volumes and processing capacity
To apply creativity to undifferentiated products
Capital Market and M&A Well positioned to grow with the market
Well developed structure for origination and distribution of securities
Opportunities
Challenges and Opportunities
79
The consolidated balance sheets have been translated into US dollars (US$), to facilitate the understanding by foreign readers, for the prevailing exchange rate provided by Brazilian Central Bank´s as of June 30, 2003 (R 2.872/US$ 1). This translation should not be interpreted, at any time, as the ammounts in Reais converted into US$ dollars.Tre transition of the corporate finance operations of Banco Itaú S.A. (“Itaú”) to Banco Itaú-BBA S.A. (“Itaú-BBA) is currently being undertaken. Assets booked with corporate sector clients are still on the books both itaú and Itaú-BBA. The assets booked at Itaú will be transfered to Itaú-BBA over the coming months. In July 2003, Fináustria (car finance) and BBA Investimentos (asset management) were sold to Itaú.
US$ Million
Itaú-BBA
5,680
8,881
3,447
10,954
2,531
545
4,103
294
751
Cash + Liquidity
Securities
Interbank Relations
Net Credit Operations
Foreign Exchange
Other Receivables
Others
Investments
Permanent Assets
Balance Sheet
977
1,424
61
2,557
238
11
297
24
10
Itaú
5,680
8,881
3,447
10,954
2,531
548
4,099
294
751
Itaú Holding
AssetsItaú-BBA
12,126
4,090
1,771
1,865
4,377
1,876
7,000
330
3,751
Deposits
Open Market and others
Accept./Issue - Securities
Foreign Exchange
Borrowings/On-Lending
Tech. Prov Ins/Cap/Pens.
Other Liabilities
Minority Interest
Stockholders` Equity
1,889
177
647
124
1,412
-
672
22
656
Itaú
12,140
4,090
1,771
1,865
4,377
1,876
7,000
330
3,736
Itaú Holding
Liabilities
Total Liabilities 5,599 37,185 37,186Total Assets 5,599 37,185 37,186
80
The consolidated balance sheets have been translated into US dollars (US$), to facilitate the understanding by foreign readers, for the prevailing exchange rate provided by Brazilian Central Bank´s as of June 30, 2003 (R 2.872/US$ 1). This translation should not be interpreted, at any time, as the ammounts in Reais converted into US$ dollars.Tre transition of the corporate finance operations of Banco Itaú S.A. (“Itaú”) to Banco Itaú-BBA S.A. (“Itaú-BBA) is currently being undertaken. Assets booked with corporate sector clients are still on the books both itaú and Itaú-BBA. The assets booked at Itaú will be transfered to Itaú-BBA over the coming months. In July 2003, Fináustria (car finance) and BBA Investimentos (asset management) were sold to Itaú.
US$ Million
Itaú-BBA
2,929
(565)
(1,238)
1,126
1,087
(351)
(191)
(61)
35
519
Operating Margin
Operating Expenses
Administrative Expenses
Net Operating Income
Income before tax and participations
Income Tax and Social Contribution
Extraordinary Result
Profit Sharing
Minority Interest
Net Income
Income Statement
270
(60)
(51)
159
156
(83)
-
(14)
0.3
59
Itaú
2,922
(566)
(1,237)
1,119
1,080
(352)
(190)
(60)
35
512
Itaú Holding
1st Semester 2003
81
Pro-Forma Balance Sheet
The operations of Itaucorp were incorporated on a preliminary basis in order to demonstrate approximately what Banco Itaú-BBA will be after all the migrations between segments have terminated. There are still adjustments to be made.Forecasts based on this exercise should therefore bear in mind the already mentioned risks and uncertainties as well as those that are beyond the control of the companies comprising the Itaú conglomerate (political and economic change, volatility in interest and exchange rates, technological change, inflation, financial disintermediation, competitive pressures on products and prices and changes in tax law).
R$ Million
LIABILITIESBanco Itaú-BBA
Pro FormaDeposits
Open market liabilities
Loan liabilities
Pass-through loan liabilities
Other liabilities
Deferred income
Capital
Balance Sheet at June 30 2003 ASSETS Banco Itaú-BBA
Pro Forma Cash, Interbank placements and securities
Loans
Bad Debt Provision
Other Assets
Fixed Assets
TOTAL ASSETS
9,290
17,637
(574)
1,428
9527,876
15,565
2,368
2,848
1,204
2,248
13
3,630 TOTAL LIABILITIES 27,876
82
The operations of Itaucorp were incorporated on a preliminary basis in order to demonstrate approximately what Banco Itaú-BB A will be after all the migrations between segments have terminated. There are still adjustments to be made.Forecasts based on this exercise should therefore bear in mind the already mentioned risks and uncertainties as well as those that are beyond the control of the companies comprising the Itaú conglomerate (political and economic change, volatility in interest and exchange rates, technological change, inflation, financial disintermediation, competitive pressure on products and prices and changes in tax law).
R$ Million
INCOME STATEMENT 1st Half of 2003Banco Itaú-BBA
Pro Forma
1,252
(174)
1,078
120
(276)
922
(415)
507
3,630
29.9%
Financial margin
Bad debt provision
Gross income from Financial Intermediation
Fee income
Administrative Expenses
Income before tax and participations
Income Tax and Social Contribution
Net Income
Net Worth
ROE (%)
Pro-Forma Income Statement
83
Results
Agenda
Stock Market
Management in different scenarios
Sensitivity Analysis - Retail
Earnings per Share
International Operations
Itaú BBA
84
International Operations
Specialization
Mass technology
Reaching a biggerbase of clients
Volume
Specialization
Differentiated Structure
New Products
SofisticationTimingVolume
Keep the ProfitabilityFocus on Segmentation
CorporateMiddle Market and
Retail
Segmentation
Cross SellingCross Selling
85
2002
Export
Import
Financial
Total
Interbank
Total
Foreign Exchange Arbritage
3,223
3,533
6,758
13,514
16,609
30,123
512 (*)
1st Half 2003
1,683
1,712
4,492
7,887
19,035
26,922
602
US$ Million
Volume of Foreign Exchange Contracts
(*) 1st half 2002
Itaú + BBA
86Total Amount (U$ Million) = 815,00
Banco ItaúBanco ItaúAmount
USDMillion
MaturityOriginal
tenor(month)
CouponSpread Over
UST (bps)Lead Manager
150.00
50.00
150.00
65.00
200.00
615.00
16-jul-03
16-jul-03
13-may-03
06-feb-03
10-jan-03
62.0
8.0
18.0
6.0
11.0
1.170%
5.000%
6.000%
6.250%
362
353
498
NOMURA / L+0.63% / AAA / Securit. / Av.Life:3.87YR
NOMURA / Aaa / A1+ / F1+ / Securit. / Av.Life:0.42YR
STD BANK / ITAU BANK / BIE
ITAU / BNPPAR Lux-Euro
ITAU BANK
Banco Itaú-BBABanco Itaú-BBAAmount
USDMillion
Maturity
Original
tenor(month)
Coupon
Spread Over
UST (bps)Lead Manager
100.00
100.00
200.00
17-jul-03
16-apr-03
24.0
12.0
4.750%
5.250%
335
413
ITAU BANK / STD BANK / with US$ Constraint / Regs Only
ITAU BANK / BIE / With US$ Constraint / Regs Only
Intl Debt Capital Market Issues - 2003 (YTD)
SUB TOTAL
SUB TOTAL
87
Inlt Debt Capital Market Issues – 2002Banco Itaú S.A.: Largest Brazilian Bank Issuer in 2002Banco Itaú S.A.: Largest Brazilian Bank Issuer in 2002
Total Amount (U$ Million) = 900,00
Banco ItaúBanco Itaú
AmountUSD
MillionMaturity
Originaltenor
(month)Coupon
Spread OverUST (bps)
Lead Manager
150.00
150.00
100.00
250.00
100.00
750.00
19-dec-02
12-jul-02
05-apr-02
20-mar-02
05-feb-02
6.0
44.0
36.0
60.0
24.0
6.250%
1.890%
6.750%
2.980%
6.000%
503
260
260
298
ITAU BANK
BAS - Sole
Dresdner
BAS / Sole
BNPPAR
Banco Itaú-BBABanco Itaú-BBA
AmountUSD
MillionMaturity
Originaltenor
(month)
Coupon
Spread OverUST (bps)
Lead Manager
50.00
50.00
50.00
150.00
28-jun-12
12-apr-05
27-feb-04
121.0
36.0
24.0
10.375%
7.500%
6.750%
695
399
378
ML-Sole
WESTLB
BNPPAR
SUB TOTAL
SUB TOTAL
88
Securities
0
50
100
150
200
250
300
350
400
450
500
0 1 2 3 4 5 6
Duration
Sp
read
89
879
3,639 4,046 3,8291,231
2,9283,590 3,318
2000 2001 2002 2003 till06/30/2003
Sells Buys
2,110
6,657
7,6367,147
Itaú DesksSecondary Trading History bet. 2000 & 2003Secondary Trading History bet. 2000 & 2003
U$ Million
Itaú desks: São Paulo, Broker Dealer (NYC), Banco Itau Europa (London)
Itaú: 11.24% of the turn over of Brazilian Corporate Issues (non-sovereign) for the first half of 2003.
(Source: EMTA – Emerging Markets Trading Association)
90
Foreign Trade Finance Market in Brazil
Ranking by Assets including Proex and BNDES Exim
TOP 5 BANKS Position In USD
1
2
3
4
5
3.8 Bi
3.0 Bi
2.92 Bi
2.91 Bi
2.7 Bi
Banco do Brasil
Banco Itaú / Itaú-BBA
Bradesco / BBV
ABN Amro Real
BankBoston
Itaú + Itaú-BBA data in the foreing trade finance market in Brazil
Number of Correspondents Banks: 120
Trade Facilities: USD 2.4 Bi
Total Facilities (Trade + Clean + Multilateral Finance): USD 2.7 Bi
91
Country Distribuition of Total Facilities
Spain – 4.7% Switzerland – 1.7%
United Kingdom – 6.2%
USA – 39.4%Scandinavian – 2.0%Portugal – 3.1%
Japan/Australia – 4.0%
Netherland – 7.5%
Latin America – 9.1%
Italy – 0.7%
Norway/Denmark – 0.5%
Middle East – 0.4%
Germany – 11.1%
France – 5.0%Canada – 4.0%
Austria – 0.4%
92
Banco Itaú Holding Financeira S.A.
September, 2003